BT7.1

What is the definition of microeconomics?

• The study of aggregate behaviour in the economy

• The study of the economic behaviour of individual consumers, firms, and industries

• The study of wealth creation

• The study of government policies

What happens to demand when the price of a good falls?

• Demand decreases

• Demand increases

• Demand remains constant

• Demand becomes elastic

What is the term for a decrease in demand when the price rises?

• Elastic demand

• Increase in demand

• Contraction in demand

• Expansion in demand

Which of the following is NOT a condition that affects demand?

• Production costs

• Income

• Population

• Tastes

What does the price elasticity of demand (PED) measure?

• The cost of production

• The total demand in the market

• The responsiveness of demand to changes in price

• The relationship between supply and demand

What does an upward shift of the supply curve indicate?

• Lower production costs

• Increased supply at existing prices

• Decreased supply at existing prices

• Higher production costs

What is equilibrium in a market?

• When demand and supply are equal

• When supply exceeds demand

• When prices are fixed

• When demand exceeds supply

Which type of market structure is characterized by a single seller?

• Monopolistic competition

• Oligopoly

• Monopoly

• Perfect competition

What effect does a fall in the price of a good have on a consumer's real income?

• It makes income elastic

• It has no effect

• It decreases real income

• It increases real income

What is the main objective of macroeconomic policy?

• To manage the economy as a whole

• To control prices

• To increase competition

• To regulate individual firms